Exhibit 14-4 The following diagram depicts firms in monopolistically competitive markets. Refer to Exhibit 14-4.Based on the diagram above,one can surmise that:

Question

Exhibit 14-4 The following diagram depicts firms in monopolistically competitive markets.  Refer to Exhibit 14-4.Based on the diagram above,one can surmise that:

Quizplus · Accepted Answer

In the long run, firms in monopolistically competitive markets earn zero economic profits due to ease of entry and exit. Therefore, the industry is in long-run equilibrium, which means the number of firms in the market is optimal and the market price for blue jeans is equal to the average total cost in the long run. Neither new firms nor existing firms will exit the industry in the long run. The diagram does not provide information about whether blue jeans are produced at minimum average total cost.

Exhibit 14-4 the Following Diagram Depicts Firms in Monopolistically Competitive